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With another $310B lined up, Rep. Jayapal — and Seattle small business owners — question federal Paycheck Protection Program

(Image: Sea Turtle via Flickr)

Rep. Pramila Jayapal told her Seattle constituents this week that she was torn on how to vote on a new $480 billion COVID-19 relief package, acknowledging positives such as money for desperately needed testing but said she was worried the massive package won’t address the needs of working people.

UPDATE 3:35 PM: Jayapal joined her colleagues in approving the aid package:

My constituents are desperate for help. I voted for this bill because Democrats took an insufficient Republican bill and made it better—but this package is so far from sufficient.  It does too little to respond to the public health emergency and stop the economic free fall. Every minute we do not act is another death, another family devastated, another business shuttered.

One small victory for Democrats like Jayapal concerned about large companies muscling in on the previous rounds of payroll protection funding — $60 billion of this round will be earmarked only for small lenders.

ORIGINAL REPORT: “It has good principles in it, but I have heard from all of my constituents that it is not serving the needs of too many people,” Jayapal said at a meeting of Seattle’s 43rd District Democrats via video conferencing Tuesday night. “It is not getting money to the unbanked, it is not getting money to people who are not high on the list of the banks that are out there.”

The U.S. Senate approved the package, which would give an additional $310 billion to the Paycheck Protection Program (PPP), Tuesday and the House is expected to vote on it Thursday. Jayapal called the small business aid program into question during the meeting, citing economists she’s spoken with who say the PPP “won’t solve anything.”

“It is not bold enough, it is not big enough,” Jayapal said. “We are trying to use systems that are from, in some cases, the 50s and other cases maybe the 70s or 80s to respond to a crisis that is in 2020 and massive.”

In an online Q&A session with Seattle small business owners earlier in the day on Tuesday held by the GSBA business advocacy organization, Mark Costello, Deputy District Director for the federal Small Business Administration, tried to relax concerns from owners who applied but didn’t receive approvals from their banks and lenders before the first round of PPP funding dried up.

“I believe your application is in there,” Costello said. “You’ve done everything you need to do. Try to have patience as SBA tries to work through the really daunting level of demand this program has spurned.”

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The new package includes a $310 billion replenishment of the program created to provide businesses with forgivable loans to cover payroll even as most workers must stay home. The previous round of PPP funding was tapped out in a matter of days and drew criticism as several large companies had their applications approved by lenders.

One Seattle business representative participating in the conference asked Costello about the criticism. “Naturally, as an SBA employee, I have a built in interest in the way that things like this are communicated and portrayed in the news and media,” he said. Costello said it does appear possible that some banks and lenders were more likely to approve existing customers before new applicants.

“Based on what I know about some of the local lenders, they may have started by saying they could only make these available to our existing customers,” Costello said.

For other business owners — including several on Capitol Hill CHS has spoken with — there remain concerns about taking a PPP loan but later being disqualified for “forgiveness.”

Under the program, borrowers who use at least 75% of the funding on payroll and limit other use of the payments to interest on existing debt or mortgages, leases, and utilities won’t be required to pay back their loans.

Business owners with most workers laid off or at home worry that they’ll end up burned by the program. Costello said they key was making sure the money gets paid to workers. “They need to be sure that at least 75% of those dollars received are used for payroll over the next eight weeks,” he said.”If they can do that, the loan is going to be forgiven.”

If there is a dispute, borrowers won’t be dealing with the government. Lenders will be responsible for determination of whether the program’s forgiveness requirements have been met “based on documentation from the customer,” Costello said.

“The onus is on the borrower.”

Worries like that and what many critics have cited as abuse of the program by large companies is why Jayapal said she is pursuing a stronger “paycheck guarantee program” — the Paycheck Guarantee Act:

That’s why I have proposed that Congress immediately implement a federal paycheck guarantee for businesses of all sizes, nonprofits, and state and local governments. My Paycheck Guarantee Act would stop mass unemployment (and would apply retroactively to pull people back off unemployment) and keep businesses from going under by guaranteeing paychecks up to a salary cap of $100,000, covering benefits including health care, and providing up to 25 percent for maintenance costs like rent and utilities. The proposal would be scalable to the degree of revenue loss, so that businesses that have 70 percent revenue loss would receive 70 percent of the grant amount.

“This allows for real flexibility to reopen partially, if public health guidance requires it, and to even re-shutter if second or third waves of infection hit a business or community,” Jayapal writes in an op/ed posted to The Hill Wednesday. “And instead of using a network of banks or sending people to navigate multiple systems like unemployment insurance, Medicaid or other safety net programs, the Paycheck Guarantee Act would include a streamlined process that utilizes already filed paperwork to determine the grant amount—and then sends checks straight from Treasury or through payroll processing companies to the employer.”

But first there is Thursday’s vote.

If she votes for the legislation, Jayapal, who was set to go back to Washington D.C. on Wednesday, said it would be with the belief that a more progressive novel coronavirus relief package would follow. She says she has “some hope” for more relief in the next round of congressional negotiations.

In a statement after the senate’s passage of the package, Seattle Mayor Jenny Durkan expressed hopes in the elements of the package touted by Democrat leaders and said “small businesses are Seattle’s economic engine and any additional resources directed toward our small businesses are key to our long term economic recovery.” She added that there needs to be a national strategy for mobilizing the country’s scientific capacity beyond more money to hospitals and COVID-19 testing.

At the state level, Rep. Nicole Macri, who represents Capitol Hill, also briefed the local Democrats, noting that with the legislature not back in session until January 2021, much of the state’s response to COVID-19 is left to the executive branch and Gov. Jay Inslee.

“I do think that in many ways Washington has been leading the nation in its public health response,” Macri said Tuesday. In an address to the state Tuesday evening, Inslee announced that plans are slowly being put in place to gradually reopen the state.

Macri, who has pushed for residential eviction measures during the pandemic said one thing she is looking at is how to phase residential construction back in. Inslee said Tuesday that the state is working on a “sensible plan” for a limited return to construction.

“We are going to need to get comfortable with a new normal, meaning that some of the practices that have been put in place since the beginning of this crisis are likely going to sustain for some time,” she said, citing robust sanitation policies, and work-from-home policies as examples.

Despite potential talk of a special session in Olympia given the unprecedented circumstances, the Democratic legislator also noted she doubted progressive revenue measures in the Legislature could make much headway before the 2021 session, especially given it is an election year.

Jayapal Tuesday also touted legislation she is spearheading with Sen. Cory Booker of New Jersey, that would move immigrants out of detention centers while also stopping immigration enforcement efforts against people who are not deemed to pose a risk to public safety during the crisis.

She said that she thinks the government could release up to 80% of individuals in immigration detention centers with this bill and “we would ensure that whoever’s left is able to physically distance and at least have basics like soap and water.”

Jayapal is also working with Rep. Ilhan Omar on another measure that would cancel all residential rent and mortgage payments during the pandemic. This comes after Seattle leaders, including Seattle District 3’s council member Kshama Sawant, called on state and federal policymakers to impose an immediate moratorium on such payments as workers are laid off in a resolution passed late last month.


More coverage…

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